Telecom Italia recently said it was considering selling part or all of its fixed-line network or mobile unit, TIM, to concentrate on broadband and media services, a move that would see it offering media content such as movies to its broadband customers. TI has been negotiating with News Corp and its 20th Century Fox unit for such content.
The announcement that it would once again consider selling off its mobile operation was greeted with surprise in the telecoms industry, where the converged service offering (fixed-line, mobile, and internet) from a one-stop shop is regarded as the perceived wisdom for future success.
The announcement was even more surprising because TI chairman, Marco Tronchetti Provera, has spent the past two years preaching the convergence message. It was only last year that TI spent more than 20bn euros ($25.4bn) to purchase the 44% stake in TIM it had floated.
It is thought that any sale of TI’s mobile operation would cost in the region of 30bn euros ($38bn), and would certainly help pay off TI debt burden, which is currently at 40bn euros ($50.8bn).
Telecom Italia is Europe’s fifth largest telecoms operator, and its decision to break ranks with its peers will no doubt be attracting the interest of rival carriers such as Deutsche Telekom AG, France Telecom SA, and Telefonica SA. Of the three, perhaps DT is the best placed to make a move for TIM, but there are also a host of private equity groups that would be willing to throw their hats into the ring.
Telecom Italia wishes to clarify that that no decision has yet been taken regarding the financial structure of the companies into which, as announced to the market, the mobile business and that of the fixed access network will be conferred, it said in an attempt to dampen speculation. With regard to the mobile business, Italian and foreign (Brazil), the company repeats that it has not given any mandate for its sale and that it has not received any offers.
However, it is clear that TI would consider any offers, even if they were forthcoming.
The board of directors of Telecom Italia will examine any opportunities of value enhancement for the network and mobile communication business that might present themselves, as well as all other and different initiatives as a function of the operating needs and sustainable development of the company, it said.
If the breakup of TI goes ahead, three trade unions have told the management they would call a strike by the end of September.
